Forest Carbon Offsets Revisited: Shedding Light on Darkwoods

This paper investigates the viability of carbon offset credits created through forest conservation and preservation. A detailed forest management model based on a case study of a forest estate in southeastern British Columbia, owned by The Nature Conservancy of Canada (NCC) is used to demonstrate the challenging nature of estimating forest carbon offsets. For example, the NCC management plan creates substantial carbon offset credits because the counterfactual is that of a private forest liquidator, but when sustainable management of the site is assumed, the commercial operator would sequester much more carbon than under the NCC plan. The broader message is that the creation of carbon offsets is highly sensitive to ex ante assumptions and whether physical carbon is discounted. We demonstrate that more carbon gets stored in wood products as the discount rate on carbon rises (addressing climate change is more urgent). A high discount rate on carbon favors greater harvests and processing of biomass into products, while a low rate favors reduced harvest intensity. Further, since carbon credits earned by protecting forests may find their way onto world carbon markets, they lower the costs of emitting CO2 while contributing little to mitigating climate change